In the February 1st edition of the Daily Stock Report, we noted that Intelās (INTC) relative strength had started to weaken and that it had dropped out of the green zone in the SIA S&P 100 Index Report. Through February, Intel Corporation has increasingly underperformed relative to its broad market and sector peers losing more and more head-to-head battles.
Yesterday, Intel dropped another 5 positions to 56th place, falling into the Red Unfavored zone for the first time since June. In the last month, Intel has dropped 31 spots and posted a loss of 3.5%, compared with a gain of 3.5% for the S&P 100 Index and a gain of 7.2% for the SIA Electronics and Semiconductors Equal Weight Index.
Candlestick Chart Shows a Head and Shoulders Top Forming:
A potentially major top continues to form in Intel (INTC) shares. A steady advance through much of 2023 accelerated near the end of the year with the shares taking a run at the $50.00 round number. Once achieved, investors appear to have started taking profits. Signs of distribution have been emerging since January when a second rally attempt peaked at a lower high. The January post-earnings gap down on a volume spike signaled a downturn had started and since then, the shares have been unable to regain lost ground.
The recent rally failure near $45.00 resistance appears to have formed the right shoulder of a bearish Head and Shoulders top pattern, mirroring the November left shoulder with the December-January tests of $50.00 forming a double head. Neckline support appears near $41.00. A failure at that level would confirm the start of a new downtrend with next potential support at an uptrend line near $36.00 then a potential measured move to $32.00.
Point and Figure Chart Downleg Continues:
Earlier this year, a 9-month rally in Intel (INTC) shares ran into resistance near the $50.00 round number. For over a month now, the shares have been falling back. In January, INTC completed a bearish Double Bottom breakdown, which has extended through February.
The shares are approaching initial support near $41.10. Should that fail, it would confirm that this is a downtrend rather than a correction with next potential support near the $40.00 round number, followed by a previous breakout point near $38.00 and then $34.40 based on a horizontal count and a retest of a trend support line. Initial resistance on a bounce appears near $46.30 based on a 3-box reversal and a retest of a recent breakdown point.
With a bearish SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) of 5 out of 10, INTC is exhibiting short-term weakness against the asset classes.
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